"Troops entered the northern town of Kilinochchi from two sides," senior military officials said on condition of anonymity.
The military had predicted on Thursday, Jan 1 that soldiers would seize the town within two days, but the level of fighting inside the town remains unclear.
The fall of Kilinochchi would be devastating to the separatist Tigers, who have has used the town as their political and military headquarters for the past 10 years and have created structures for an independent state, such as a police, courts, and tax offices.
Recent government military offensives have forced the rebels out of much of their territory in the north of the Indian Ocean island nation. President Mahinda Rajapakse has promised to crush the rebel group and end the nation's 25-year-old civil war this year.
A 6-year-old Norway-brokered truce was officially called off last year with both sides openly violating the agreement.
Senior Sri Lankan officials have said repeatedly over the past two months that Kilinochchi would fall soon, but troops became bogged down by heavy rains and fierce rebel resistance.&13;
The rebels have fought since 1983 to create an independent homeland for the minority Tamils, who have suffered decades of marginalisation by successive governments controlled by the Sinhalese majority. The conflict has killed more than 70,000 people.&13;
OneIndia News (With inputs from Agencies)&13;